Regtech startups have raised roughly $2.3B across 317 deals since 2012. Deal activity is on track to set a new high in 2016.

Where is this data coming from?

Start your free trial today

Email

Where is this data coming from?

Start your free trial today

Email

Over the past 5 years, an increasing number of startups have sprouted up that aim to use technology to tackle compliance and other regulatory requirements. Since 2012, this space, called regtech, has raised roughly $2.3B across 317 deals.

What is regtech? Regtech refers to companies developing technologies aimed at simplifying and streamlining compliance, risk management, reporting, data management, and more. While the bulk of startups are focused on regulation technology within financial services (KYC/AML software solutions, etc) there are a number of startups that are working on regtech related to supply chain and product, real estate/construction, life sciences, and even social media.

Using CB Insights data, we highlighted annual and quarterly investment trends into the regtech space. Additionally, we looked at deal share by stage, the most active VC investors, and the most well-funded companies in regtech.

RESEARCH BRIEFING: RegTech Trends

Dive into financing trends, corporate activity, and innovative approaches to dealing with new regulatory complexities.

Email

Annual deals and dollars

Within the last few years, deal activity has seen a progressive rise. In 2016 year-to-date (YTD) through 11/14/16, deal count to regtech startups has already reached 78, the same number as in 2015. If deal activity continues at its current pace, the category will see an estimated 90 deals by the end of 2016.

At the current run-rate, funding to regtech startups is set to drop slightly this year to roughly $575M. Despite the very slight drop, there were some notable deals in 2016 including to UK-based Onfido, which raised a $25M Series B led by Idinvest Partners; US-based Riskalyze which raised a $20M growth equity round led by FTV Capital; and Canada-based Assent Compliance, which raised a $20M growth equity round led by Volition Capital.

Track all the Regtech startups in this brief and many more on our platform

Startups are working to change how companies comply with regulation. Sign up for a free trial and look for Regtech Startups in the Collections tab.

Quarterly deals and dollars

In Q3’16, regtech deal activity reached its third-highest quarterly total with $165M raised across 24 deals. 3 out of the last 5 quarters saw 20+ deals, with Q1’16 hitting an all-time high of 26 deals.

On a funding basis, Q3’16 was up 56% over the previous quarter, with $165M raised by regtech startups. This represented a significant bounce back after funding totals contracted significantly earlier this year, compared to late 2014 and the first half of 2015.

Q3’16 also saw some notable regtech deals including Washington-based Avalara‘s $50M growth equity round led by Sageview Capital, Warburg Pincus, and Technology Crossover Ventures, as well as California-based Trunomi‘s $3M Seed VC II round led by Saturn Partners and Fintonia.

Deal share

Early-stage deal share reached 48% in 2016 YTD, a 4 percentage point increase from 2015.Some notable early-stage deals completed so far in 2016 include a $16M Series A to Droit Fintech, which provides software to improve compliance in derivatives trading; a $8.2M Series A to ComplyAdvantage, which offers an anti-money laundering (AML) surveillance platform; and a $1.6M Seed VC round to Chainalysis which provides blockchain compliance solutions.

Mid-stage (Series B and C) companies took 11% of deal share, down from 22% in 2015. Throughout the 5-year period, mid-stage regtech companies have accounted for between 11%-22% of deal share.

Late-stage (Series D+) deal share reached a 5-quarter high in 2016 YTD, accounting for 17% of all deals.

Most active VC investors

Salesforce Ventures and Bain Capital Ventures tied at the No. 1 spot as the most active investors in regtech startups. Salesforce Ventures has invested in regtech startups such as the aforementioned Onfido and RedOwl Analytics while Bain Capital Ventures has invested in companies like Venminder and Troo.ly, among others.

Other active investors include BDC Venture Capital and Battery Ventures.